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A Case Study

Meet Tom.   Tom is 57 years old, married, has four (4) children (all around high school age) and has a net worth of approximately $14,000,000.00.  Tom’s primary assets are comprised of his small business (single shareholder S-Corporation worth $2M that provides employment placement consulting services to highly paid executives), commercial real estate (worth $7.1M), stock portfolio (worth $1.3M), personal residence (worth $2.3M and paid off) and some ERISA Qualified pension plans (worth approx. $1.3M).  Tom’s Company, along with his commercial real estate investments, provide Tom and his Family with an annual income of approximately $900,000.00.  Tom desires to retire at age 65 and pursuant to the Exemption Assessment Calculator, only 11% or $1.54M worth of Tom’s assets are currently “exempt” from creditors under Federal and State exemption laws (mostly ERISA Qualified retirement and Homestead Exemptions).  However, given Tom’s income and horizon to retirement (age 65), with proper Exemption Planning, Tom can justify recharacterizing as exempt as much as another 70% of his current assets as “necessary for future retirement” to fund into his Private Retirement Trust® (“PRT®”), increasing the total Exemption Protection Potential from 11% to 81%. 

If Tom were hit with a law suit today, and assuming that he had done no Exemption Planning “in advance”, approximately 89% or $12.46M of Tom and his Wife’s assets would be considered non-exempt in a bankruptcy filing context, and otherwise exposed to creditor attack pursuant to the enforcement of a civil judgement in state court.